GDP per capita is defined as GDP divided by what?

GDP per capita is defined as GDP divided by what?

• A. Population
• B. Number of households
• C. GDP
• D. Labor force

Answer: (A)

GDP per capita measures how much output is available per person, so you divide total GDP by the number of people in the population. This yields an average, per-person figure that helps compare living standards across countries or over time. If you divided by the number of households, you’d get output per household, not per person. Dividing by GDP would just invert the overall size of the economy and tell you little about per-person output. Dividing by the labor force gives output per worker, which ignores those not in the labor force and isn’t a per-person measure. So the divisor is the population.

GDP per capita measures how much output is available per person, so you divide total GDP by the number of people in the population. This yields an average, per-person figure that helps compare living standards across countries or over time. If you divided by the number of households, you’d get output per household, not per person. Dividing by GDP would just invert the overall size of the economy and tell you little about per-person output. Dividing by the labor force gives output per worker, which ignores those not in the labor force and isn’t a per-person measure. So the divisor is the population.